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Germany’s post-Merkel era is likely to be “greener” | Analyst Picks| RiskMap 2021

Germany

Germany’s post-Merkel era is likely to be “greener”

Florian Otto | Associate Director

Defying the doomsayers foretelling Chancellor Angela Merkel’s political demise for years, she is poised to complete her fourth and final term when Germany goes to the polls between late August and late October 2021. After 15 years in the job, Merkel remains Germany’s most popular politician. Her government, long riven by infighting within the coalition parties, found its footing with the COVID-19 pandemic and according to polls, popular satisfaction with the administration is at its highest since 2004. However, the chancellor will not run again, and the centre-left Social Democratic Party (SPD) has ruled out another grand coalition with the centre-right Christian Democrats (CDU/CSU), meaning Germany will get a new government in 2021.  

The end of the “Merkel era” alone represents a watershed moment, but political uncertainty is significantly compounded by the ongoing saga to determine the next CDU leader, as well as who will lead the party into the election. The CDU faces a divisive leadership election in January. While the party’s poll ratings currently benefit from Merkel’s popularity and cross-party appeal, none of the leadership contenders comes close to the chancellor on both counts. This means the party cannot take continued high levels of support for granted. If the leadership contest should leave behind a party divided between centrist and conservative factions, the Christian Democrats would struggle to hold on to their current commanding lead. 

The only thing that seems certain is that the Green Party (Greens) will be part of the next government, as popular concerns about climate change and support for de-carbonising the economy continue to rise. This means tighter emissions regulations and targets, supported by an expansion of carbon pricing, would likely feature in any coalition deal alongside public investment in green technologies and infrastructure. While a CDU/CSU-Green coalition would likely seek to balance costs for business and more ambitious climate objectives, a left-wing government including the SPD and far-left The Left would be likely to push for more stringent emissions reduction targets and be less concerned about increasing the regulatory and cost burdens on companies. With Germany expected to become “greener”, the next government is also likely to push for more ambitious climate policies at the European level.  

As the election approaches and campaigning gathers pace, Germany is unlikely to turn inward completely and disengage at the EU level, as the bloc seeks to chart a way towards recovery from the pandemic. More broadly, the coalition parties know they risk the ire of centrist voters if they should abandon sound government for partisan squabbles. So, while the longer-term outlook is uncertain, the home stretch of Merkel’s government is likely to offer more stability.  

 

Germany’s post-Merkel era is likely to be “greener”

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